King Indus. Realty, Inc. v. Rich

• Decision Date: 14 February 1997
• Docket Number: No. A96A1738,A96A1738
• Citation: 481 S.E.2d 861,224 Ga.App. 629
• Parties: , 97 FCDR 619 KING INDUSTRIAL REALTY, INC. v. RICH.
• Court: Georgia Court of Appeals

Page 861

481 S.E.2d 861

224 Ga.App. 629, 97 FCDR 619

KING INDUSTRIAL REALTY, INC. v. RICH.

No. A96A1738.

Court of Appeals of Georgia.

Feb. 14, 1997.

Schreeder, Wheeler & Flint, Steven G. Hill, James C. Morton, Atlanta, for appellant.

Morris, Manning & Martin, Lewis E. Hassett, Hassett, Cohen, Beitchman & Goldstein, Robert W. Hassett, Atlanta, for appellee.

SMITH, Judge.

Jack Rich brought suit against King Industrial Realty, Inc., an industrial real estate brokerage firm where he worked as an agent until his termination in 1989. Rich's complaint alleged breach of his agency contract in several respects and sought reformation of the contract to correct a typographical error pertaining to bonuses. Rich also sought costs and attorney fees on the ground that King Industrial acted in bad faith and was stubbornly litigious. Cross-motions for summary judgment were filed, and this appeal by King Industrial is from several of the trial court's rulings on the motions. We affirm.

As an agent, Rich's relationship with King Industrial was governed by three written documents: an agency contract, a company policy, and a 1986 memorandum regarding the calculation of bonuses. The agency contract, executed in 1984, had an initial term of 12 months, and it was automatically renewed at the end of each succeeding 12-month period. The contract further provided for termination for cause at any time upon seven days' notice. Under the contract, Rich was compensated for his services by a commission and bonuses: he would receive 50 percent of the commission paid to King Industrial on the sale or lease of property less any listing fees or commissions paid to outside agents. Commissions were not to end upon Rich's death or termination, but they were to be reduced from 50 percent to 40 percent. A year-end bonus was payable if certain conditions were met: At the end of each year, the agent received a bonus of 60 percent of the amount by which one-half the agent's annual commissions exceeded a sum comprised of his "desk costs" plus a " management fee" of $15,000. ¹

King Industrial appeals from the trial court's grant of Rich's motion as to two counts of Rich's complaint and from the trial court's denial of its own motion for summary judgment on Rich's claim for costs and attorney fees for bad faith and stubborn litigiousness. ²

1. Rich's motion to dismiss the appeal is denied.

2. King Industrial contends the trial court erred in ruling that King failed to give Rich seven days' notice, which was required by the agency contract. We do not agree.

The company policy provision does not mention a specific time period for notice of termination, but provides that the relationship may be terminated "upon notice." The more specific provision in the agency contract specifies the time period within which notice must be given before termination. Seven days' notice is required. Contrary to King Industrial's argument, these provisions regarding notice do not conflict and thereby create a jury issue. The provision in the company policy is simply general, while the provision in the agency contract is more detailed.

King Industrial admits that seven days' notice was not actually given. It argues, however, that Rich actually had much longer notice of his termination. Rich was terminated for cause, and over a considerable period of time before he was terminated he had received various warnings, reprimands, and even a suspension because of his behavior. But these precursors of his termination did not constitute notice of termination in compliance with the contract, as urged by King. They were warnings, perhaps, that his behavior was unacceptable, and that if it continued he could be terminated; they were not notice that he actually was being terminated.

3. King Industrial asserts the trial court erred in ruling that it breached the agency contract by reducing Rich's commissions paid after he was terminated. We do not agree. Because King Industrial breached the contract itself by failing to give the required seven days' notice before terminating Rich, King Industrial could not invoke the commission reduction provision of the same contract.

In Burritt v. Media Mktg. Svcs., 204 Ga.App. 848-850(3), 420 S.E.2d 792 (1992), relied upon by the trial court, this Court held that an employer who terminated a commissioned salesperson without the seven-day written notice to which she was contractually entitled committed an actionable breach of contract. Id. at 848(2), 420 S.E.2d 792. We characterized the failure to pay earned commissions as a forfeiture and cited the principle that under Georgia law forfeitures are not favored. We held that the employer breached the contract in a fundamental respect by failing to give the required notice, and it therefore had no right to insist upon another provision in the contract whereby the employee's already earned commissions were forfeited on any sales for which payment was not received within ten days after discharge. Id. at 848-850(3), 420 S.E.2d 792. The principles enunciated in Burritt are equally applicable here.

We find no merit in any of the several arguments King Industrial makes in support of its contention that the trial court erred in its ruling on this issue or in its reliance upon Burritt. King Industrial argues that the trial court erred in construing the notice provision as a condition subsequent and by concluding that reducing the commissions worked a forfeiture. Georgia law favors conditions subsequent rather than precedent and favors remediation by damages rather than forfeiture. Fulton County v. Collum Properties, 193 Ga.App. 774, 775, 388 S.E.2d 916 (1989). Regardless of whether the commission reduction provision is a condition subsequent or a covenant of the contract, reducing Rich's already earned commissions is obviously a forfeiture. Although factual differences exist between Burritt and this case, it is immaterial that the provision in this case, unlike Burritt, also provides for payment of a portion of the earned commissions. It also provides for the forfeiture of another portion. Although it may be true, as argued by King Industrial, that certain administrative expenses were associated with leases generating residual commissions, those expenses existed regardless of whether Rich was terminated.

Finally, even if we accept King Industrial's arguments involving the agency contract, summary judgment on this issue would have been right for a different reason. The Company Policy document provides that Rich's "association with [King Industrial] may be terminated by either party at any time upon notice given to the other; but the rights of the parties to any fees which accrued prior to said notice shall not be divested by the termination of this arrangement." This provision must be construed against King Industrial, as the drafter. OCGA § 13-2-2(5). Construing it against the drafter and against forfeiture, it is apparent that the trial court's ruling is correct. A ruling right for any reason must be affirmed. Thornton v. Ware County Hosp. Auth., 215 Ga.App. 276, 280, 450 S.E.2d 260 (1994).

4. King Industrial raised the defense of accord and satisfaction below as to Rich's allegation that it breached the agency contract by reducing his commissions and by failing to pay him certain bonuses. The trial court entered summary judgment in favor of Rich without addressing the accord and satisfaction defense. King Industrial argues that the entry of summary judgment on these counts was an implicit ruling that no such accord and satisfaction existed, and that this ruling was therefore error.

The record shows that King Industrial informed Rich by memorandum in July 1989 that he was terminated and that reduced commissions would be paid starting in September 1989. In a responding memorandum, Rich disputed the reduction of his commissions and stated his understanding that he was also entitled to earned bonuses. King Industrial again responded, quoting the applicable provisions of the agency contract in support of its position. Rich made no further reply, and he eventually negotiated the reduced commission checks.

King Industrial argues that this exchange of memoranda, particularly Rich's failure to respond again to the final King memorandum, indicates that Rich had come to agree with King Industrial's position, and that Rich's eventual negotiation of the reduced checks demonstrates that an accord and satisfaction was effectuated. We do not agree that an accord and satisfaction existed here, and we affirm the trial court's ruling.

As with any contract, establishment of an accord and satisfaction requires a showing that a meeting of the minds took place. If no agreement exists to settle all matters in dispute, no accord and satisfaction results. Derosa v. Shiah, 205 Ga.App. 106, 108, 421 S.E.2d 718 (1992). We cannot agree with King Industrial that either Rich's acceptance of the reduced commission checks or the exchange of memoranda indicates in any way that the parties agreed to settle their dispute about the reduced commissions or Rich's entitlement to the bonus funds; the only agreement evidenced is one to disagree.

OCGA § 13-4-103(b) provides that acceptance of a check marked "payment in full" or other equivalent condition will constitute an accord and satisfaction if a bona fide dispute exists as to the amount due or the payment is made pursuant to an independent agreement that the payment will satisfy the debt in question. The statute does not provide, however, and we have found no case that provides, that the mere acceptance of a check unmarked with conditional language will itself suffice to constitute an accord and satisfaction. Generally, where the evidence is in conflict the issue of whether an accord and satisfaction existed is one for a jury. Derosa, supra, for instance, was a dispute between employer and former employee regarding severance pay. In Derosa, some evidence was presented that...